Malaysia : Big rail projects to get more traction with BN win

Malaysia : Big rail projects to get more traction with BN win : The development of various multi-billion rail infrastructure projects are expected to gain better clarity and speedier traction now, following the victory of the Barisan Nasional coalition in Sunday’s general election, industry players said.

Construction stocks were going through a lull due to uncertainty over the general election.

But analysts said that with these fears removed, the construction sector would be a clear beneficiary. Research houses have highlighted the construction sector as one of the positive performers going forward, following the results of the general election.

RHB Research said in its report: The (construction) sector will now steer clear of potential radical changes proposed by the Pakatan Rakyat coalition that could have hurt earnings and fundamentals including a review of MRT-related contracts.”

Analysts said the dishing out of more rail-related projects are to be expected in the later part of this year.

Some of the pertinent rail infrastructure projects that are still in the pipeline are the remaining two lines of the mass rapid transit (MRT) network, the high-speed rail (HSR) connecting Kuala Lumpur and Singapore, the Gemas to Johor Baru electrified double-tracking project and the latest is another light rail transit (LRT) extension between Petaling Jaya and Port Klang.

Currently, the Greater Kuala Lumpur region is witnessing the ongoing construction of the RM23bil Sungai Buloh-Kajang MRT project and the RM7bil LRT extension.

Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Ismal Kamal told StarBiz that the results of the recent elections injected more motivation for SPAD to continue with the public transport transformation plan not only for rail and the urban areas but for the rural areas in other states as well.

“We are at the beginning of the transformation and I believe the Government should be more inclined now to put in further investment and stronger focus in public transport transformation going forward,” he said.

Mass Rapid Transit Corp Sdn Bhd (MRT Corp) CEO Datuk Azhar Abdul Hamid said: “Now, we can continue to work and support the Government as well as carry on with the transformation programme for the benefit of the people and country.

“We also need to continue to build on our nation’s strength and overcome our weaknesses,” he said.

On the upcoming line 2 and 3 of the MRT, Azhar said the public should expect more news on this in the coming weeks or months.

“Our approval machinery will work on that with greater focus and priority now,” he said.

Syarikat Prasarana Negara Bhd group managing director Datuk Shahril Mokhtar said that Prasarana would continue with efforts to further improve the quality of public transportation and the sector’s transformation plan.

On the LRT line connecting Petaling Jaya to Port Klang, Shahril said that Prasarana had just embarked on the studies and expected to complete it in six months time before handing it to SPAD for a more detailed feasibility study.

“We need to address this particular route based on the high-density population, travel pattern and congestion issue,” he said.

RHB Research upgraded the construction sector to “overweight” from “neutral” on the back of reduced risk premium following the victory of the Barisan coalition.

“The sector will now steer clear of potential radical changes proposed by the Pakatan Rakyat coalition that could have hurt earnings and fundamentals including a review of MRT-related contracts and abolition of toll roads. The risks of cancellations, changes to terms and scopes of MRT-related contracts are now greatly reduced,” it said in a report yesterday.

RHB Research has also upgraded its one-year forward target price-to-earnings ratio (PER) for construction stocks to 10 to 16 times from eight to 13 times.

“Fair values of construction stocks under our coverage are raised by 1% to 39% to reflect the unchanged to higher multiples, coupled with the rolling forward of our valuation base year to financial year 2014 from 2013,” it said.

Analysts at Public Bank Investment Bhd said that following the BN win, the market would see more projects being dished out such as MRT line 2 and 3, Gemas-Johor Baru electrified double-tracking and Kuala Langat treatment plant among others.

“With most construction companies busy in one way or another with the largest infrastructure project, the Sungai Buloh-Kajang MRT, we believe most of the jobs especially the rail projects will commence closer to 2017 which is closer to the completion date of the MRT first line.

After clinching jobs worth RM28bil last year, we believe the sector could see potential jobs worth at least half of what was achieved in 2012 to be dished out this year,” they said.


Source : thestar

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